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Slovenia Is Spain: Is Another European Country's Bank Bailout On The Way?

Tyler Durden's picture





 

Has the Spanish bank bailout set a precedent for all other insolvent EMU member countries to follow? Of course. The only question is when is the stigmata of demanding a bailout (which Europe now has no choice but to grant courtesy of set precedent, be it via ESM or otherwise) less relevant than national pride, than preserving one's banking sector, and preferably preempting the kinds of bank runs that pushed Spain to demand a bailout in the first place. For one small Eurozone member country the answer may be if not now, then very soon. Slovenia's Dnevnik asks a simple question: "How serious is the situation of Slovenian Finance - are we on the way of Spain?" The answer, in not so many words: very likely yes.

From the google translated article - highlighted section most relevant

Although at the last auction of short-term debt during the Slovenian buyers again dominated by domestic financial institutions, full of liquid assets of the European Central Bank (ECB), were required average yields are relatively high, recalls Primoz Cencelj of KD Funds.... In exchange for 60.373 million, the government should provide a 0.9 percent annual return, which is 0.1 percentage points more than the auction just over a month ago. Perhaps even more concern is that Slovenia had offered to investors for 0.05 per cent higher rate than at the end of May Spain, which are currently both sentenced to issue short-term debt securities.

Just the Spanish case most striking, as it reflects the growing number of parallels with Slovenia. They offer themselves as the question whether Slovenia is on track to follow Spain and Europe ask for recapitalization of banks. "Despite the similarities between the two economies, Slovenia is still quite far from the Spanish scenario," said economist Igor Masten, who estimates that the delay in the Spanish economy worse, while weak compared to the material condition of the Spaniards over-indebtedness of Slovenian companies. Here, the similarities do not end because the two sectors, the total Grants of high exposure to real estate sector, the crisis has so brutally crushed. Banks' balance sheets in the Iberian peninsula and on the sunny side of the Alps are therefore imbued with bad investments and desperately needed injection of fresh capital. The Slovenian banks should be around 4 billion euros of bad loans, which represents about 8 percent of total assets. On the hair-like figures are from Spain, where they take up bad assets of investment banks 8.37 percent or more than 150 billion euros. The Spanish Government had therefore been to seek financial support in Europe, while Slovenia will have, at the probable lack of interest of foreign investors' funds to recapitalize banks to provide itself.

But time is no longer in abundance, although the government to purchase Co Co bonds, at least temporarily solve the equity problems of NLB. This is a problem in the banking sector will not be removed, similarly as in Spain, the real problems of the information in the financial market does not lie in the largest bank. Threats to Asia to greater capital hole, the unofficial information is exposed by Nova KBM and Abanka as well as some smaller banks in domestic ownership, which can be fatal effect on the banking system and compels the country to seek assistance from the European Fund for the Permanent Protection euro (ESM). "It may not even be helpful," says Cencelj, which estimates that around 3.5 billion euros, at least for some time solve the banking problems. Search resources in the financial markets would be on the other hand, are much more expensive, because the required yield on ten-year bonds Slovenian stay in the area between 5.5 and six per cent.

 


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Thu, 06/14/2012 - 10:48 | Link to Comment SilverTree
SilverTree's picture

This is getting fun!

Thu, 06/14/2012 - 10:53 | Link to Comment battle axe
battle axe's picture

A comedy of errors.....

Thu, 06/14/2012 - 10:58 | Link to Comment sunaJ
sunaJ's picture

A confederation of dunces...

Thu, 06/14/2012 - 11:01 | Link to Comment SHEEPFUKKER
SHEEPFUKKER's picture

humanity=insanity

Thu, 06/14/2012 - 11:41 | Link to Comment Manthong
Manthong's picture

..as long as their bailout is "unconditional".

Thu, 06/14/2012 - 11:31 | Link to Comment Chaffinch
Chaffinch's picture

Fun indeed!
We used to have PIIGS - then some ZHers spend hours creating more acronyms to allow for France, the UK, Cyprus etc. If we add Netherlands and now Slovenia, we get, err, Frickin Piss (as Charlie on 2.5 men might have put it!)

Thu, 06/14/2012 - 10:50 | Link to Comment Croatian Patriot
Croatian Patriot's picture

Old news!

Thu, 06/14/2012 - 10:50 | Link to Comment slaughterer
slaughterer's picture

Germany is thinking of applying for a bailout as well.  Too many Landesbank and Bundestaat in trouble.  

Thu, 06/14/2012 - 10:50 | Link to Comment JailBank
JailBank's picture

Up next Lichtenstein? How is Vatican City on funds?

Thu, 06/14/2012 - 11:03 | Link to Comment Caviar Emptor
Caviar Emptor's picture

San Marino to bail out Andorra

Thu, 06/14/2012 - 11:19 | Link to Comment bigwavedave
bigwavedave's picture

South Americans and Philipinos have had a good couple of years. Cashed up I would say.

Thu, 06/14/2012 - 11:05 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

 

 

Slovenia is not Iceland?

 

Thu, 06/14/2012 - 10:51 | Link to Comment Snakeeyes
Snakeeyes's picture

But the Spanish bailout isn't working. Spain 10 year sov yield up again, unemployment increasing, house prices declining,

They should film AMC's "The Walking Dead" in Spain. They wouldn't have to pay for makeup.

http://confoundedinterest.wordpress.com/2012/06/14/the-walking-dead-part-2-zombie-borrowers-threaten-bailed-out-spanish-banks/

Thu, 06/14/2012 - 10:54 | Link to Comment Seorse Gorog fr...
Seorse Gorog from that Quantum Entanglement Fund. alright_.-'s picture

MOAR!!!

Thu, 06/14/2012 - 10:54 | Link to Comment LULZBank
LULZBank's picture

The Slovenian banks should be around 4 billion euros of bad loans

They can probably earn that much as commission, brokering a deal for Spanish bailout.

Thu, 06/14/2012 - 10:55 | Link to Comment robf355
robf355's picture

So Slovienia needs 3.5 billion euros, and their contribution to the EFSF is 3.6 billion, something doesn't add up

Thu, 06/14/2012 - 10:58 | Link to Comment LULZBank
LULZBank's picture

Rounding error?

Thu, 06/14/2012 - 10:59 | Link to Comment Magnum
Magnum's picture

Slovenia is a rich country with a lot of resources.

Thu, 06/14/2012 - 11:12 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

 

 

Which is why it has been targeted.  Those resources and wealth must be liberated.

Read this book: Confessions of an Economic Hitman.

Thu, 06/14/2012 - 12:49 | Link to Comment ThirdWorldDude
ThirdWorldDude's picture

They also have a socialist gubbermint since 2008(proudly declaring themselves successors of the Yugoslavian commies):

"According to the Institute of Macroeconomic Analysis and Development of Slovenia, 'consolidated gross debt of the general government, having totalled €13.7 billion at the end of last year (38.1% of GDP), increased to €16.4 billion (45.2% of GDP) by the end of the first quarter this year'... Slovenian budgetary debt is growing [at] a speed of almost €10 million per day."

http://www.euractiv.com/future-eu/leftist-slovenia-economic-declin-analysis-507180

 

edit: what's with the downtick? I didn't make those facts up, but I've surely hit a socialist nerve...

Thu, 06/14/2012 - 23:24 | Link to Comment StychoKiller
StychoKiller's picture

Next up:  Pottsylvania!

Thu, 06/14/2012 - 11:39 | Link to Comment No Euros please...
No Euros please we're British's picture

yup, if it has gold reserves it's just begging to be liberated.

Thu, 06/14/2012 - 13:56 | Link to Comment Don Diego
Don Diego's picture

correct, and also the Slovenian population is way too white....they could use some diversity, why don't they open their borders to those poor Sudanese stuck in Israel?  

Thu, 06/14/2012 - 11:22 | Link to Comment Abraxas
Abraxas's picture

What resources? All their raw materials are coming from Bosnia, and all their exports are going back to ex-Yugoslav states.

Thu, 06/14/2012 - 12:10 | Link to Comment GeneMarchbanks
GeneMarchbanks's picture

LOL.

Trading patterns die hard, eh? I think he was referring to ones the Germans bought up.

 

Thu, 06/14/2012 - 19:09 | Link to Comment koperniuk666
koperniuk666's picture

Doh! Let me guess..... you have never been there....right? (I Have)

Slovenia is;

1. Tiny

2.Has few resources

3. Is overpriced ( perhaps thats what you mean by 'rich')

4. Is quite pretty.

 

You Meerkans need to get out and visit these places before you PONTIFICATE.

 

Thu, 06/14/2012 - 11:00 | Link to Comment youngman
youngman's picture

First one in wins....or out...or crys wolf....or has sex with a secret service agent...

Thu, 06/14/2012 - 11:03 | Link to Comment Dr. Engali
Dr. Engali's picture

This doesn't even make sense. These countries are borrowing money at a higher rate to contribute to the bail out fund at a lower rate which they seek to get a bail out from. Who thinks this shit up?

Thu, 06/14/2012 - 11:10 | Link to Comment walküre
walküre's picture

Private bankers of course. Nobody else stands to benefit from this bullshit.

Their scheme has become blatantly obvious and more and more people in Europe are connecting the dots.

Thu, 06/14/2012 - 11:47 | Link to Comment Ghordius
Ghordius's picture

that's so true. +1

though there is another dimension to that. every european country wants to keep it's banking system under it's thumb (more or less) because they dread being under a banking cartel's thumb (happened very often). it gives them more leeway with the management of their debt. of course this is getting murkier and murkier, but as I wrote last year europeans are famous for nationalizing their banking systems if they feel the pinch. not yet, though, not yet...

Thu, 06/14/2012 - 11:57 | Link to Comment GeneMarchbanks
GeneMarchbanks's picture

I'd say we're almost there though. We can truly and proudly proclaim T.I.N.A like no one in particular before us, and actually truly mean it this time.

The race is on, don't get left behind.

Thu, 06/14/2012 - 13:10 | Link to Comment walküre
walküre's picture

what's wrong with national banks controlled by government elected by the people for the people?

better than a private central bank which manipulates government to pardon me, fuck the people?

Thu, 06/14/2012 - 15:51 | Link to Comment Ghordius
Ghordius's picture

+1 walkure, they are always partners, the government + the CB + the banking system. in some cases the one dominates one of the others or both. historically, the european setup often favoured the gov on top of the banking system and the CB on the lines, as neutral as possible. Germany, Switzerland and Austria are classical cases (made even more complex by regional state banks being the shareholders of the CB, where Spain a less classical one and Italy a very special one. In the UK (and somewhat in France), the gov is usually completely on top of the CB, while the banks are kept away from the arms of the gov.

In America, sadly, the story is different, though I'd say that for long time banks and the gov shared control of the CB.

Thu, 06/14/2012 - 17:17 | Link to Comment akak
akak's picture

What's wrong with monetary freedom and NO government-run central banks in the first place?

Fri, 06/15/2012 - 02:31 | Link to Comment Ghordius
Ghordius's picture

then you have an effect called Dollarization - good article here http://en.wikipedia.org/wiki/Dollarisation

Thu, 06/14/2012 - 19:20 | Link to Comment koperniuk666
koperniuk666's picture

walkure - you are a thick tosser.
This scheme is dreamt up and managed by the Politicians.

Can you really not see this?? !!

Why the fuck are you here on ZH if you do not have the capacity to read and to learn?

go back and vote SPD again you useless fuck and lets get this over with.

Thu, 06/14/2012 - 11:16 | Link to Comment Nobody For President
Nobody For President's picture

Who thinks this shit up?

 

Rube Goldberg, Doctor.

Thu, 06/14/2012 - 11:46 | Link to Comment Non Passaran
Non Passaran's picture

Yes, that's well known, but few people talk about the other side of the coin (which I find even funnier), and that is Germany who gets paid to take money and then lends it to PIIGS at 3% of whatever that rate is. 

That sounds like a great business model. The only problem is that like China, they may not see their monies again.

Thu, 06/14/2012 - 11:03 | Link to Comment cherry picker
cherry picker's picture

US Current account deficit $137 Billion, unemployment going up, $16 trillion in debt.  European governments and banks have trouble treading water and they are getting tired.

Yet I see ads for high ticket items like cars, homes and art like never before. 

Stock market hasn't tanked yet with all this good news in the air.

Confusing as hell, isn't it?

Thu, 06/14/2012 - 11:05 | Link to Comment Dick Darlington
Dick Darlington's picture

Just look at Slovenian govt bonds late last yr when spanish and italian bonds blew up. They did too, big time, and were saved by the LTRO death decision by ECB. They haven't exploded now when Italy and Spain are heading to the gutter. Lots of downside dead ahead boys and girls... Get out while u still can.

Thu, 06/14/2012 - 11:16 | Link to Comment youngman
youngman's picture

Its a Slovenian Slope once it gets started.....

Thu, 06/14/2012 - 11:43 | Link to Comment Non Passaran
Non Passaran's picture

Their banks took a crapload of LTRO money.  No wonder they can't find "investors".  

Too bad the Swiss pegged CHF to Euro, that ruined all the fun with CHF-denominated loans in the Central and East Europe.

Thu, 06/14/2012 - 11:06 | Link to Comment Spastica Rex
Spastica Rex's picture

Stigmata?

Thu, 06/14/2012 - 11:30 | Link to Comment GMadScientist
GMadScientist's picture

Bleeding of some kind will mos def take place.

Thu, 06/14/2012 - 11:48 | Link to Comment Spastica Rex
Spastica Rex's picture

Will it be Christ-like?

Thu, 06/14/2012 - 11:07 | Link to Comment walküre
walküre's picture

It's a non-issue.

ESM won't get ratified on June 29th in German parliament.

Vast majority of Germans are dead set against it because get this .. since the Spanish drama they actually GET IT and understand that everyone is looking for Germany as the CONTRIBUTOR of last resort.

Without Germany there is NO ESM and there are no bailouts. All these mind games are futal exercises and just increasing the potential for a full on EURO collapse and EU break-up.

Greece votes on June 16th and the outcome will be another stalemate at best or at worst a Greek exit (whether voluntarily or by RSVP).

Thu, 06/14/2012 - 11:52 | Link to Comment americanspirit
americanspirit's picture

walkure - Germany isn't the only EU country that hasn't/won't ratify the ESM. I believe there are 6-7 others who have not ratified, and then there's Finland who has ratified conditional upon the ESM receiving actual collateral for funds it uses to 'bail out' various broke entities. In other words, there really is no ESM - just a lot of vested interests talking as if it already exists.

Thu, 06/14/2012 - 12:03 | Link to Comment Ghordius
Ghordius's picture

+1 here http://en.wikipedia.org/wiki/European_Stability_Mechanism - France and Slovenia are through

-------

Though in the long term this one (the "Austerity Compact", aka "let's behave as grown-ups" compact) is much more important http://en.wikipedia.org/wiki/European_Fiscal_Compact

and the Irish had a referendum on it! of course you don't want to talk about this on the MSM

-------

not that sure that Germany and Finland will not sign if everybody else does

Thu, 06/14/2012 - 13:07 | Link to Comment walküre
walküre's picture

Well Spain's contribution the ESM of 93 billion Euro is probably out when their own banks need 100 billion. Could be wrong but Spain insisted for the longest time they would be able to solve their own banking crisis. But they can't anymore.

Ghordius, I will buy your debt if you buy mine and in the process we get stinking filthy rich .. or can at least pretend?

Thu, 06/14/2012 - 11:12 | Link to Comment spanish inquisition
spanish inquisition's picture

I am getting confused... Does this mean that Slovenia is or is not Uganda?

Thu, 06/14/2012 - 11:21 | Link to Comment Lebensphilosoph
Lebensphilosoph's picture

You can take a euro out of a Slovenian, but you can never take the Slovenian out of the euro.

Thu, 06/14/2012 - 11:27 | Link to Comment GMadScientist
GMadScientist's picture

I've printed up these cue cards for your convenience.

Is not Uganda (can devalue, has B rating). Is Spain (cannot, has all-but-junk rating).

http://www.youtube.com/watch?v=cqNYb_Py8fQ

Thu, 06/14/2012 - 11:15 | Link to Comment tmosley
tmosley's picture

The dominos are falling faster now.

http://www.youtube.com/watch?v=iUkgNvvF7Vk

Thu, 06/14/2012 - 11:18 | Link to Comment Nobody For President
Nobody For President's picture

Three point five billion for Slovenia? Shit, Draghi can get that out of petty cash.

Thu, 06/14/2012 - 11:25 | Link to Comment GMadScientist
GMadScientist's picture

Sorry Mr. Draghi, capital controls...<shrug>

Thu, 06/14/2012 - 11:19 | Link to Comment Abraxas
Abraxas's picture

Slovenia was hailed as an example of how even a Balkan country can achieve great prosperity only if they join the right group (EU). The fact was that Slovenia's progress was largely due to trade surplus with the same partners they always had, namely Bosnia and Serbia, and lots and lots of debt.

Thu, 06/14/2012 - 11:32 | Link to Comment ThirdWorldDude
ThirdWorldDude's picture

Slovenians failed to recognize the fact that they are for the Balkans what Germany is for the EU - a stabile, export-oriented economy. They wanted to hang out with the "nice kids" and joined in the EMU. The stronger currency ruined their exports and their economy is declining ever since.

Thu, 06/14/2012 - 11:48 | Link to Comment vrabobabo
vrabobabo's picture

I am Slovenian. Biggest export partner for Slovenia is Germany. Export decline is due to weakening German economy especially car manufacturers.

 Cheers.

Thu, 06/14/2012 - 11:56 | Link to Comment Ghordius
Ghordius's picture

+1 thanks, I was going to write something along those lines. "financial guys" often don't understand the role of the small companies in europe, and how this is all interconnected. it's often my talking point why we want the euro, but of course this is a different point

Thu, 06/14/2012 - 12:06 | Link to Comment ThirdWorldDude
ThirdWorldDude's picture

This chart explains why switching from tollar to euro was so detrimental for your economy

http://www.focus-economics.com/en/europe/slovenia/economic-data/slovenia-trade-balance.html

 

Cheers!

Thu, 06/14/2012 - 11:24 | Link to Comment GMadScientist
GMadScientist's picture

I'm reminded of the phenomenon in corporations where, when it's clear a bad quarter will need to be reported, all parts of the company are encouraged to pile on as much stupidity as they've accumulated since the last shitshow.

 

Thu, 06/14/2012 - 11:27 | Link to Comment azzhatter
azzhatter's picture

I worked for one of these corps. We need revenue, sell anything I don't give a shit how shitty the deal.

 

Next quarter, who signed this fucking deal? No profit, we need profit. Cut expenses, fire everybody

 

Next quarter, We need revenue, sign anything you can no matter how shitty. Rinse and repeat

This is america's largest industrial conglomerate and piece of shit

Thu, 06/14/2012 - 11:33 | Link to Comment walküre
walküre's picture

GM or GE?

Thu, 06/14/2012 - 11:42 | Link to Comment GMadScientist
GMadScientist's picture

Hey now...those are "job creators" you're talkin' bout! ;)

 

Thu, 06/14/2012 - 11:58 | Link to Comment FunkyOldGeezer
FunkyOldGeezer's picture

I'm really surprised no-one (political leader that is) has spelt out to everyone in Europe why integration is an absolute must. Europe has to be united for when the oil runs out and the real fighting begins. Stronger defense (and attack) forces WILL be needed to fight off every other bast**d.

Reality sucks, but that's what it has to come down to eventually, unless the guys at Southampton University really did discover cold fusion some years back.

 

Thu, 06/14/2012 - 12:07 | Link to Comment No Euros please...
No Euros please we&#039;re British's picture

Bullish for Belgian caterers.

Thu, 06/14/2012 - 12:45 | Link to Comment billsykes
billsykes's picture

What no one is talking about is Austria, Hungary, Romania & Belgium. Austria is one of those countries that can go 0-60 in a second- they loaned out something like 140% of GDP mainly to Romania, where their own banks are seeing climbing default rates of 12% and who's 2nd biggest trading partner is..... Italy. 

 

https://www.wsws.org/articles/2010/jan2010/badb-j30.shtml

Eurostat has just released data putting official numbers on debt-to-GDP across Europe for the end of 2011:

At the end of 2011, the lowest ratios of government debt to GDP were recorded in Estonia (6.0%), Bulgaria (16.3%), Luxembourg (18.2%), Romania (33.3%), Sweden (38.4%), Lithuania (38.5%), the Czech Republic (41.2%), Latvia (42.6%), Slovakia (43.3%) and Denmark (46.5%). Fourteen Member States had government debt ratios higher than 60% of GDP in 2011: Greece (165.3%), Italy (120.1%), Ireland (108.2%), Portugal (107.8%), Belgium (98.0%), France (85.8%), the United Kingdom (85.7%), Germany (81.2%), Hungary (80.6%), Austria (72.2%), Malta (72.0%), Cyprus (71.6%), Spain (68.5%) and the Netherlands (65.2%).


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